Reference no: EM131582582

Question - On January 1, 2015, Parula Corporation owned 90% of the 14,400 outstanding shares of Sope Inc. Parula accounts for its investment using the equity method. On January 1, 2015, Sope had shareholders' equity of $304,000, of which $56,000 was common shares and $248,000 was retained earnings. The balance in the investment in Sope account on the books of Parula was $453,600 on that date. The entire acquisition differential was allocated to some equipment with a remaining useful life of 10 years at January 1, 2015.

During 2015, Sope reported a net income of $96,000, earned evenly over the year and paid dividends of $48,000 at mid-year. On April 1, 2015, Sope issued 3,600 new shares at a price of $35 per share. Parula did not acquire any of these shares. In 2015, Parula earned net income of $240,000 from its own activities.

Required:

a) What consolidated net income should Parula report for 2015?

b) What is the parent's share of Parula's consolidated net income for 2015?

c) What amount should be shown as noncontrolling interest on Parula's consolidated balance sheet as at December 31, 2015?